SHOWA SYSTEM ENGINEERING CORPORATION

Business Details

Provides comprehensive services covering all areas of corporate computer systems, including infrastructure, such as system integration, consulting, and software design, development, and maintenance. Major customers are Nikko System Solutions (current period revenue of ¥1,868 million) and BIPROGY (¥979 million). Revenue is composed of two forms: SE Services and Custom Development (Build-to-Order), covering a wide range of industries including finance, manufacturing, and distribution. Revenue for FY2026 (ending March 2026) was ¥8,651 million, accounting for 99.1% of total company revenue of ¥8,731 million, making it the core segment.

Recent Overview

Achieved increased revenue and profit for the fifth consecutive period, with SE Services leading both revenue and segment profit to record highs.

Software Development Business revenue for FY2026 (ending March 2026) was ¥8,651 million (up 5.0% year on year), and segment profit was ¥1,577 million (up 7.6% year on year), both marking record highs. SE Services expanded from ¥7,498 million to ¥8,049 million, while Custom Development (Build-to-Order) declined from ¥744 million to ¥603 million. Major customer Nikko System Solutions was merged into The Japan Research Institute effective April 1, 2026, and changes in the customer structure are expected from the next period onward. Increased orders for DX-related projects and a significant expansion in new graduate hiring drove growth.

Key Products

Growth Drivers

• Continued expansion of corporate demand for DX promotion and core system renewal (accelerating amid the full-scale implementation of AI in society)
• Increased orders for DX-related projects due to strengthened talent development in AI, cloud, and data science fields
• Expanded orders through active proposal activities targeting priority investment areas of major customers (such as BIPROGY)
• Improved talent supply capacity through continued aggressive expansion of new graduate hiring and enhanced collaboration with business partners
• Increased demand for system investment underpinned by expanding investment in automation and labor-saving measures amid IT talent shortages
• Business expansion in both existing and DX areas through advanced talent development based on the medium-term management plan "+transform into Values"

Risks

• Rising talent acquisition costs and intensifying recruitment competition due to the chronic shortage of system engineers
• Risk of revenue concentration in major customers (Nikko System Solutions and BIPROGY combined account for approximately 33.8% of total company revenue)
• Risk of changes in customer relationships and order structure following the merger of Nikko System Solutions into The Japan Research Institute (April 2026)
• Concerns over suppressed IT investment by client companies due to US trade policy, inflation, and geopolitical risks
• Risk of changes in client investment plans due to fluctuations in financial and capital markets
• Risk of substitution or obsolescence of existing SE Services due to technological innovation such as generative AI
• Cost increase pressure from expanded talent investment (increased new graduate hiring, advanced talent development) and expenditures for the 60th anniversary commemorative events